1. The common stock of J&J Tool has yielded 4.2%, 9.7%, -15.4%, 12.5% over the past four years, respectively. What is the geometric average return? a. 2.04% b. 2.08% c. 2.13% d. 5.16% e. 2.20%

2. One year ago, you bought a stock for $35.37 a share. You received a dividend of $1.00 per share last month and sold the stock today for $36.12 a share. What is the total return of this investment? a. 4.95% b. 4.98% c. 5.02% d. 5.04% e. 5.11%

3. The stock of Chocolate Galore is expected to produce the following returns given the various states of the economy. What is the expected return on this stock?

State of economy Probability of state Rate of return

Recession 0.10 -0.09

Normal 0.65 0.07

Boom 0.25 0.12

a. 6.61 percent b. 6.65 percent c. 6.68 percent d. 6.69 percent e. 6.72 percent

Use the table below for Problems 4 and 5.

State of economy Probability of state Rate of return

Stock A Stock B

Boom 0.4 0.05 -0.03

Normal 0.6 0.12 0.14

4. Given the above information, what is the standard deviation of stock A? a. 0.0317 b. 0.0328 c. 0.0339 d. 0.0343 e. 0.0351

5. Given the above information, what is the covariance of stock A and stock B? a. 0.00275 b. 0.00276 c. 0.00279 d. 0.00281 e. 0.00286